Government Bank Loans Will Cost You More
Over the course of the past couple of years, several big name high street banks and building societies have been bailed out with loans from the Government in order to keep them afloat, following massive losses by the various institutions caused by arrears and defaults on bad credit loans which had previously been issued by them.
Those lenders which have received Government loans have effectively been nationalised and therefore at least partly owned by the tax payer. As a part of the bail out agreement, these banks were required to offer a range of realistically cheap loans to customers in an attempt to help boost the economy and housing market.
But a recent survey by the price comparison website Realpricecomparison.com has revealed that a homeowner loan from one of the nationalised lending institutions is typically more expensive than those available from other banks and building societies in the market.
This is particularly the case when it comes to fixed rate loans. On average, a Government owned lender will charge an extra 0.84 per cent each month, more than one of the best of market cheap loan deals from other lenders. On an average sized homeowner loan of £150,000, this equates to an additional £105 every month in interest payments.
Francis Ghiloni of Realpricecomparison.com accused the Government owned lenders of being too selective about who they were prepared to offer loans to, “Nobody should expect them to lend crazily or in all circumstances, but we can expect them to be competitive. There is a strong suggestion that Gordon Brown’s banks are deliberately pricing themselves out of the market on certain products, giving the impression that they are lending but actually being unlikely to be asked to.”
